Thursday, April 26, 2007

The View from Europe

Things in Europe are looking pretty good these days. From this week's Economist:

Pleasant surprises continue to emanate from the euro area—notably from Germany, its biggest economy. This week Ifo, a Munich research institute, unveiled another strong reading for its monthly business-sentiment index. The country's five main economics institutes, including Ifo, have raised their forecast of GDP growth this year to 2.4%; last autumn they expected a percentage point less. French presidential candidates apart, the zone's politicians have been unusually accepting both of the currency's rise and of one of its causes: the European Central Bank's clear intention to raise interest rates further. The ECB is likely to take another step, from 3.75% to 4%, in June.

...The zone's fastest-growing markets are to the east. Julian Callow, of Barclays Capital, estimates that exports to the European Union's new and would-be members (including Turkey) and Russia went up at an annual rate of 20% in the second half of last year. They are now 19% of the total, up from 13% in 1999. Exports to Asia have also been growing fast.

The European and American economies have been a couple of years out of sync with each other for some time. That makes for good timing - it's nice to see growth in Europe getting stronger just as we're having doubts about the US economy. US exports, and the US current account balance, should benefit.

Contact

The Street Light is written by economist Kash Mansori, who works as an economic consultant (though views expressed here are entirely his own), writes whenever he can in his spare time, and teaches a bit here and there. You can contact him by writing to the gmail account streetlightblog. (More about Kash.)